An Introduction to Frequent Flyer Programs and Portals

So far on this blog we have covered ways to leverage credit card bonuses as a way to get cheap flights and airlines miles.  Another staple in any travelhacker’s toolbox is the use of frequent flyer programs and their related shopping and dining portals.

The first step for anyone interested in travel hacking should be to sign up for frequent flyer programs and hotel loyalty programs of interest.  In order to receive credit for miles flown and to be eligible for statues or special offers the airlines must have your account information so they can deposit your miles accordingly.  For example, on an upcoming trip from Phoenix to San Francisco and back the three of us will be flying on United and all three of us have United Frequent Flyer accounts (Mileageplus accounts) that will earn us each 1,302 award miles:

uSFO

This may not seem like a ton of miles, but every little bit counts in this game, I mean you are going to take the trip anyway you might as well get the miles for it.  It’s important to note to that airlines add multipliers for premium cabins so if you were to fly this same flight in business class you might get 150% of the miles flown and first class might be 200% bonus since the tickets cost much more than a standard economy seat.

AAshopping

While most of you may be familiar with frequent flyer mileage programs, you may not know about shopping portals.  Most major domestic and international carriers have shopping rewards portal that offers you bonus miles per dollar spent at many online stores where you’re already spending money. If you shop through the American Airlines portal and are looking to buy shoes through New Balance’s online store you will earn an additional 4 miles per dollar spent.  The portal simply allows your browser cookies to link to your frequent flyer account and once the money is spent the additional miles will be credited to your American Airlines account.  If you were already planning on spending $100 at New Balance you will now be rewarded with an additional 400 frequent flier miles without paying any more money, all you need to do is shop through the portal.  There are hundreds of stores where you can take advantage of these portals such as Target, Home Depot, Staples, Groupon, Sears, Lowes, Kohls, etc.  Each airline has their own portal and one we use often is Chase Ultimate Rewards portal.  Last week, we bought a new carry on travel backpack for Jennifer and a quick search through the ultimate rewards portal showed me that ebags was offering 10 pts/$ .  For the same $145 bag that was on amazon, I bought it for $145 (free shipping as well) and earned over 1400 ultimate reward points on top of it by purchasing through the ebags Ultimate Rewards shopping portal:

curIn a later post we will discuss dining portals — the dining portals work much in the same way as shopping portals but work with restaurants that are linked to your credit card.  Until then, be sure to register you and your family for frequent flyer programs and start with the ones that you are most likely to use based on your home airport.  These programs are free to join and are easy to create online.  Some of our favorites are:

American Airlines Shopping

Delta Skymiles Shopping

US AIrways Dividend Miles Storefront

Southwest Rapid Rewards Shopping

Start getting credit and earning miles for purchases and flights you already make and take.

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The Basics — Credit Score

Tony and I are not wealthy — we’re both gainfully employed in jobs we like, but not jobs that pay exceptionally well (hooray for public education). Still, we’ve been able to find a way to successfully travel without going in to debt. How? Travel hacking. Travel hacking is a term that loosely refers to the process of earning “points” to use for discounted/free hotel and air travel, taking the most expensive aspects of travel and removing them as a hindrance to seeing the world.

This post will be the first of many that will explain the process that we’ve taken to build up points. Today we’ll focus on understanding your credit score and how your score will affect the way you get started with travel hacking.

Credit Score 

In order to take advantage of lucrative sign-up bonues from credit card offers, it’s important to know and monitor your credit score. It can’t be overstated, maintaining a strong credit score is imperative to this hobby. Individuals with less than ideal credit score will first need to focus on building good credit before you can take advantage of many credit card offers. Travel hacking is about responsibly using credit to build points — NOT about going in to debt; its about enjoying traveling the world and saving money over the long term. If you are unwilling or unable to committ to paying off your credit balance(s) in full each month, this is not the hobby for you.

To get started, we recommend using a credit monitoring service such as Credit Karma or Credit Sesame. These are both free monitoring services that give you your credit score and include features that allow you to estimate the impact on your score were you to open additional lines of credit. There are hundreds of blog posts and strategies regarding sign up strategies and “app-o-ramas”, but keep in mind that it’s best to start slowly and monitor your credit score before signing on the dotted line for multiple cards at once. Remember, a solid credit score is vital to your travel hacking success.

Your FICO credit score is broken down into 5 categories:fico

 

  1. Payment History — 35%
  2. Outstanding Debt/Amount Owed — 30%
  3. The length of your credit history –15%
  4. New credit inquiries — 10%
  5. Types of credit in use — 10%

There is no exact algorithm that you can use to estimate your credit which is why its best to use a free monitoring service to know your individual score. In general, those that do not have a credit history will need to slowly open lines of credit and responsibly pay them off to build their credit score. Those who have a history of late or missing payments will need to establish a track record of on time payments and reduce the number of debts owed in order to improve their score.

There are certain cards available to those with less than stellar credit that can help to build scores (usually with low credit limits and limited bonuses). In general, those with good credit scores (>700) will in most circumstances be approved for the credit cards that offer the highest bonuses and earn rates. Banks typically offer a hefty points or mileage bonus as an incentive for consumers to open an account with them. These cards typically have a spending minimum that must be met within the first 30-90 days of the account opening. Once the minimum has been met, the bonus miles or points will post on the statement close date. The miles or points will then be credited to your frequent flyer, bank, or hotel account and will become available to redeem for flights, nights, or other travel expenses.

Biggest take away? Know your credit score. If you’re already sitting pretty, then you can get excited about taking advantage of credit offers with big bonuses. If your score needs a little TLC, don’t despair. Take the time to build up your credit score through smart, sensible financial decisions (consistent on-time payments, reduce your number of debts, etc.) and your hard work will pay off as your score rises.